Corporate tax, as with personal income tax, can often be a controversial but very interesting topic.
The Organisation for Economic Co-operation and Development (OECD) frequently releases publications for all industry sectors world-wide. This organisation was created in 1961 and is based on Paris, France and South Africa is a member nation.
Quoting OECD: “South Africa is Africa’s largest economy and usually is the “prime mover” for OECD activities supporting the objectives of NEPAD (The New Partnership for Africa’s Development), especially in Southern Africa, on taxation, investment, competition policy and governance. As the OECD and South Africa deepen their collaboration, South African policy makers gain access to OECD expertise and good policy practices; the OECD, in turn, benefits from exposure to South African policy perspectives, to enhance mutual learning”.
The OECD Organisation provides very similar statistical elements to Statistics SA (STATSSA) on a regular basis. Such statistics may be found on http://www.oecd.org/southafrica/.
In January 2019, the OECD released their first edition report of Corporate Tax Statistics. This report provides numeric and infographics of corporate tax statistics for 94 countries around the world. Corporate effective average tax rates ranges from as high as 44% (India) to as low as 0% (British Virgin Islands) whereas South Africa has a rate of 28% and the USA a rate of 34%.
By comparison, the average tax rate for the OECD’s 21 African member states is 15.3% and for the 25 Latin-American and Caribbean member states is 15.4%.
The effective average tax rate (EATR) reflects the average tax contribution a firm makes on an investment project earning above-zero economic profits. It is defined as the difference in the NPV of pre-tax and post-tax economic profits relative to the NPV of pre-tax income net of real economic depreciation.
Equally interesting is statistics related to Corporate tax revenues as a percentage of total tax revenues and as a percentage of GDP. There has been an average increase in both categories for 88 member nations for the period 2000 to 2016. Average corporate tax revenues as a share of total tax revenues increased from 12.0% in 2000 to 13.3% in 2016, and average corporate income tax revenues as a percentage of GDP increased from 2.7% in 2000 to 3.0% in 2016.